All Told, Q2 Treasury Yield Rise Not That Abnormal – Janney

By Michael Aneiro

The second-quarter spike in Treasuries yields jolted financial markets, but by some measures it wasn’t that unusual. For starters, Treasuries had been slumping toward the end of the first quarter, then rallied through much of April, which took some of the edge off of their subsequent two-month slide when you use early April as your starting point. Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, today takes a look back at the second quarter, with the ten-year Treasury yield finishing Friday at 2.49%, and says all in all Treasuries have seen worse:

That brings the quarterly change in the ten year note to 64 basis points. While that rise seems startlingly large, a rise in the ten year yield of that magnitude has actually occurred in seven quarters over the last decade, making it uncommon though certainly not unheard of, with the last time in 2010.

Bear in mind too that historically speaking Treasury yields have rarely been as low as they were back in April, so a 64 bps rise coming off that low is still huge in percentage terms, and the speed with which yields rose first in mid-May, and then over the course of less than a week in mid to late June, is what caught people so off guard.

LeBas notes that third-quarter bond trading is already opening up in the red, with yields starting the morning higher by about 2 – 3 basis points in most maturities “to start what will almost certainly be a slow week for the domestic markets.”